what are the advantages and disadvatages of common stocks?

Answer 1

advantages:

if the companies whose stock you own make more money than generally the price of the stock goes up.

sometimes companies whose stock you own will raise their dividend providing you with more money and causing the price of the stock to rise.

In the past the average increase in stock values has outperformed the yields in debt instruments.

There is the chance that by buying a particular stock you could hit a real winner, as buying MSFT during the early 80's or INTC or CSCO.

Investments in common stocks are very liquid. They can normally be liquidated at a moments notice unlike real estate investments.

One can invest in common stocks with very little capital.

Disadvantages:

The companies one invests in may go bankrupt and one may loose all of the investment

Common stock investments are subject to market fluctuations that have nothing to do with the particular stocks but instead with other events such as panics.

Investments in common stocks are effected by government policy which may adversely effect the value of the stocks, such as wage price controls, price caps, interest rate increases, tax increases, etc.

Investments in a particular company may be impacted by changes in technology.

Investments in a particular company may be impacted by management ineptitude, incompetence, and illegal activity

Answer 2

Common Stock Advantages

Answer 3

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Advantage: Best investment vehicle over time. Outperforms gold, real estate. Average rate of return about 10% a year over the history of the stock market. Disadvantage: Risk. You are putting your money into a company or companies that may make bad decisions or have bad earnings, causing the stock to go down.

Answer 4

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Answer 5

The advantages of investing in common stocks are, they could be worth a whole lot of money. The disadvantages are, the stock market could crash and you would lose all your money.

Answer 6

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Answer 7

One of the disadvantages of common stocks is that if the company goes bankrupt you are the last in line to get anything thats left over. So bonds are safer in that respect.

Answer 8

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Answer 9

Read at this site about
What are the advantages and disadvantages of buying stocks instead of bonds?
http://www.investopedia.com/ask/answers/124.asp

Answer 10

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